NFTRH Interim Update 3.7.13, HUI Key Technical Points and Gold Stock Discussion

The reversal from down to up yesterday morning – happening just as yesterday’s NFTRH update was being written – followed through for the rest of the day and it did so on volume, generally speaking.  It looks like we have a bottom of some kind.  We’ll stop well short of calling it the bottom, because the 62% major bull market Fib at 260 is still sitting there and because the macro markets are heading for what I believe will be some important changes in the spring time.

HUI weekly chart

Today we will again use the weekly chart to gauge what may be in play.  Going forward in NFTRH and in updates, we’ll use everything from 60 minute to monthly charts as needed to stay on the right track, technically.  If/as the bottoming scenario solidifies, we will also chart some individual quality stocks in the sector.

The weekly chart above shows what is currently a Hammer (the week is not over) right at the top of an important support zone.  If this holds up, it would be point ‘C’ of the proposed A-B-C correction scenario.  If this ends up being an A-B-C correction only, there may be no new downside later on.  So let’s give the positive view some wiggle room to a very bullish scenario as well.

But for now, we have a drop right to the 62% cycle Fib, which is also the 50% Fib to the major secular bull market.  This drop was reversed and for a day at least, followed by volume buying across the board.  That is a bullish thrust and implies that any decline can be bought (with a mental or actual stop loss just a very few % below yesterday’s lows).

So assuming that yesterday was a bottom of some kind, where to now?  The chart above attempts to paint some scenarios.  Here are the objectives in order…

  1. Retake the neckline at 375
  2. Retake the lost support at 420
  3. Retake the declining weekly EMA 50 and then the neckline to the 2011 topping pattern, currently intersecting 450
  4. If this is a bottom, we also have some upside Fib retrace levels noted on the chart spanning from 410 to 456.

Do all those things Huey and you will have changed the weekly trend to up.  Meanwhile, we should read the current situation as nothing more than a potentially fine trading opportunity.  A key element here is how over sold HUI became.  The reading is comparable to 2008, which packed enough negativity into the sector to launch a head-spinning cyclical bull.

As for out of control inflationary policy makers in the US and worldwide, they are not in control.  They may think they are.  The majority of market participants may think they are.  They may be basking in the self-congratulatory glow of a resounding victory by the will of man over the will of the markets right now.  But Ben Bernanke is the same fool he was in spring, 2011.

When this becomes evident to even the dimmest market participants, it will be too late to reverse the course of things.  I am still unclear on whether coming events are going to feature increasing inflation expectations/fears or a deflationary collapse.  Hence, the guarded attitude going forward and the willingness to adjust on the fly.